As the stock geek in the friend circle of people who work in the tech sector, psychology, IT, etc (which I work in none of those fields btw just all of my friends do) I had a recent meet up with a few of these friends and they asked me how my portfolio was doing so far this last 2 years. I explained pretty good, because I got lucky with timing on leveraged ETFs. I made some money investing in SQQQ in 2022 (30% gain) because I knew the party of 2020/2021 was coming to an end. I also invested in OILU in 2022 in February because I knew oil was going to jump for months.
One of my closer friends asked me about TQQQ. More specifically what would happen to a person's money (investment) if they invested $25k just in TQQQ today and did not touch their investment for many years. At first I answered “that is like betting all on red at the roulette wheel”. Then I did the math again in my head and realized the only way a person could loose all of their money would be if in the future we had a day where the stock market dropped at least 33.3% in one day (since TQQQ is 3X leveraged). This is not possible because the circuit breakers would kick in at 7%, then again at 13%, then again at 20% (I believe after 20% the market would just close for that day). Also keep in mind TQQQ has rebalancing and decay.
After giving it more thought I told my friend I would get back to him. He is adamant that we are near the market bottom, and even thinks we hit bottom late last year and that it would be good for a person in their early 30s to invest $25k in just TQQQ and not touch the funds for decades. I advised him to never invest in just one thing with that amount of money. It would be common sense to throw money in VOO, QQQ and maybe at most 15% of your portfolio in TQQQ. I would say it would be wiser to swing trade SQQQ and TQQQ but it would take a few hours each week to time things correctly – it would be easier mentally to just invest in TQQQ and leave it – if you can stomach the rollercoaster.
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